EU court backs use of rival trademarks in search advertising

The European Court of Justice has ruled that the use of rival companies’ trademarks in Google’s Adwords would not normally be construed as infringement.

Companies using their rivals' trademarks as keywords for search advertising can sleep a little easier following a European Court of Justice statement on Thursday that such use would not normally be construed as infringement.

The court was ruling on a case brought by international flower delivery service Interflora against British retailer Marks & Spencer after M&S purchased variations on "interflora" as keywords on Google's Adwords search advertising service.

Although it offered its views on whether such actions would constitute infringement, the European Court of Justice said that this particular case was up to the national courts to decide.

Nonetheless, the clarification of the scope of trademark protection online will be welcomed as this lawsuit was just the latest in a number of cases that have sought to define the limits of search-engine advertising under European Union law.

The court considered two functions of trademarks: to identify the origin of goods or services, and to establish reputation and customer loyalty. It said that the trademark's function of indicating origin is only "adversely affected where the advertisement displayed on the basis of the keyword search does not enable reasonably well-informed Internet users to ascertain whether the goods or services referred to originate from the proprietor of the trademark or from a third party."

However protection for trademarks with a reputation deals with "dilution" (detriment to the distinctive character of a trademark with a reputation) and "free-riding" (taking unfair advantage of the distinctive character or repute of the trademark).

The Court said that the selection without "due cause" of words identical to another person's trademark that has a reputation may be construed as free-riding. That is particularly likely to be the conclusion in cases in which the Internet advertisers offer goods which are imitations of the trademarked goods. But where the goods offered are not mere imitations and cause no detriment to the trademark's repute (tarnishment) such use falls as a rule within the lines of fair competition, the court said.